Originally published in REI Ink Magazine.

Experiencing a loss at one of your properties can be overwhelming, and dealing with insurance claims can be a complex process. By familiarizing yourself with the ins and outs of insurance claims before a loss occurs, you can proactively protect your business while minimizing potential setbacks. This general outline of do’s and don’ts can save you time, money, and potential headaches.


  • Thoroughly review your insurance policy – Before an incident occurs, take time to carefully review your insurance policy. While it may not be the most exciting read, this is your guide to what is covered and what is excluded. If you’re unsure about something, ask your insurance agent, and get everything in writing.
  • Promptly report ALL claims – Delays in reporting incidents could lead to prolonged processing or even a denial of your claim. As soon as a claim-worthy incident occurs, contact your insurance provider to initiate the claims process.
  • Document incidents – Take photos, videos and write detailed descriptions of what happened. Doing so will substantiate your claim and help the insurance carrier understand the extent of the damage.


  • Withhold relevant information – Failure to disclose relevant information about an incident can lead to claim denial. Provide accurate and complete details.
  • Exaggerate or provide false information – Fabricating or exaggerating details about an incident can lead to serious consequences. Insurance carriers investigate every claim and giving false information could result in denial or even legal action.
  • Make unnecessary claims – Minor incidents that you can afford to pay for out of pocket may not warrant a claim. Making frequent or unnecessary claims can lead to higher premiums.
  • Neglect necessary maintenance – After an incident has occurred, it is still important to maintain the property. Failure to do so could worsen the damage and may impact the outcome of your claim.

The Balancing Act of Filing Claims

Simply turning in claims should not directly affect your rates if they are not paid out. However, a pattern of filing unnecessary claims can affect your relationship with your insurance carrier. A string of loss frequency, even with no payout, makes carriers begin to wonder when the big loss (that they will have to pay) is going to hit. Maintaining a balanced claims history will help foster a positive and long-term relationship with your carrier. If one of your properties incurs damage that is not the result of a covered peril or not going to cost more than your deductible to repair, you’re better off paying for repairs out of pocket.

What will affect your rates are frequent controllable loss claims.

Controllable losses are incidents that could have been avoided or mitigated through proper precautions. In this respect, frequency is just as bad as severity. Insurance companies believe that if an investor manages their properties and businesses the right way, controllable losses are typically avoidable.

Do your due diligence to prevent controllable property losses, such as:

  • Cooking and heating fires
  • Water damage from burst pipes
  • Theft
  • Tenant damage
  • Tree damage

With that said, always inform your carrier of liability incidents, even if you’re unsure that a claim will be filed. If a claim does get filed, your carrier is in a better position
to help defend you because you made them aware of the incident when it occurred.

Never try to negotiate a settlement for a liability incident on your own.

Never Give an Insurance Company a Reason to Deny a Claim

Ensuring that the information on your policy is accurate and up to date is extremely important. The last thing you want is to suffer a loss, file a claim, and be informed that coverage will not be afforded to you because of a clerical error.

Below are a few key considerations that have a huge impact on the outcome of your insurance claims.

Named Insured

It is common for investors to utilize different business names, but if you’re not careful, this practice can leave you without coverage after a loss.

Consider this: My insurance policy for an apartment complex is registered under my legal name, Shawn Woedl. My tenants pay rent to the business entity with which I bought the property, SW, LLC. If one of my tenants slips on the stairs and breaks their leg, they’re going to sue SW, LLC because that’s where they pay their rent. The issue is, if my LLC is not listed as “named insured” on my insurance policy, and a claim is filed, coverage may not be available.

This is also a common issue when investors change their entity name but forget to update it on their insurance policy. The first named insured on the insurance policy must always be the entity that owns the property, whether that’s you or your business.

Occupancy Status

Reporting changes in occupancy status is the best way to ensure you always have the proper coverage. If your property is listed as “occupied” but is actually vacant, and a loss occurs, your insurance carrier may deny any claims.

Insurable Interest

Insurable interest is a legal concept stating you must have financial or other interest in the damaged property to be eligible for reimbursement. This basically means an entity that does not have interest in a property cannot insure said property.

Let’s say you’ve inherited your aunt’s cabin in the Smoky Mountains. As soon as the deed is signed, your aunt’s homeowners policy no longer applies because she has no insurable interest. It is your responsibility to obtain insurance for the inherited cabin to be covered.

Avoiding Claim Delays

To avoid any discrepancies that may hinder the claims process, double-check that the following is listed correctly on your policy:

  • Property address
  • Mailing address
  • Listed mortgagee
  • The bank account for the “pay to” entity
  • Occupancy status

Additionally, having a comprehensive understanding of the differences between Basic, Broad, and Special Form coverage is essential, as is being aware of your coverage limits for things such as detached structures or loss of rents. This will allow you to make informed decisions based on your policy’s coverage.